Al-Ghalayini: Tap into high growth sectors for potential opportunities

BMG Financial Group's CEO Basil Al-Ghalayini participated in the ninth annual Opportunity Arabia Seminar recently, which was organized by The Middle East Association in partnership with the Saudi Committee for International Trade.
Opportunity Arabia 9 aims to introduce British companies to a thriving and growing marketplace and to raise awareness with respect to the limitless business opportunities in Saudi Arabia. In his role, Al-Ghalayini presented some of the high growth sectors in the Kingdom like health, housing and energy, which gave British businessmen and companies an insight into investment opportunities, sizes and future speculations within these sectors across the Kingdom.
The seminar enabled ample networking with experts including keynote speakers like Sir Alan Munro, British Ambassador to the KSA from 1989-1993; Omar Bahlaiwa, secretary general of the Council of Saudi Chambers; and Sir Sherard Cowper-Coles, business development director, international, BAE Systems. The banking, oil and gas, Saudi women in leadership positions, green issues in the construction sector, industrial clustering, health, and education were represented among the other participating guest speakers.
Within the housing sector, Al-Ghalayini shared insights comparing the Kingdom to other GCC countries within this sector, highlighting the current real estate market boom, with massive infrastructure investment providing the basis for growth and a positive outlook for most sectors of the real estate market. A key characteristic of the Saudi market is that local buyers and not foreign investors primarily generate demand. As the demand is increasing, approximately 275,000 housing units/year need to be built from 2012 to 2015, the majority of housing developers are focusing more on the affordable housing segment for lower and middle-income classes.
The total spending in housing development will increase to $ 30 billion by 2016 in which the housing construction will account 31 percent of total construction sector, offering sizable opportunities for companies specializing in this segment, especially in affordable housing.
In regards to the energy sector, Al-Ghalayini shared that over the next 5 years, Saudi Arabia plans to spend over $ 100 billion on energy related projects, with $ 60 billion toward power projects.
Experts suggest that the demand for electricity in Saudi Arabia will increase by 25 percent during the next five years. With the massive industrial development in the Kingdom, the electricity demand is expected to increase in 2020 to 67,000 MW. As a result, the Saudi government is raising its electricity production and distribution capacity, focusing on renewable energy, water treatment and seeking to reduce the overwhelming consumption of electricity and its waste in lighting, air-conditioning and water desalination, among others.
In his discussion on health care, Al-Ghalayini noted that this sector is one of the largest in the region in terms of expenditures, size, activity and potential. At present, the Saudi government funds most of the demand for health care capital and operating expenditures. To ensure that Saudi nationals' health needs are met without adversely affecting economic progress is to increase private sector participation in the health care system. Only by attracting partners from the private sector who can bring world-class medical knowledge, management skills, and capital to the sector, Saudi Arabia will be able to make high-quality health care available to everyone in Saudi society.
In 2010, the government has allocated in its Five-Year Plan $73 billion to various initiatives. Measures include the construction of 117 hospitals, 750 primary health care centers, and 400 emergency centers. Health care spending in Saudi Arabia has increased significantly over the past few years. A high prevalence of lifestyle diseases including obesity, diabetes, and cardiovascular diseases will considerably increase the spending on pharmaceutical, hospital services and medical devices in the future.
Al-Ghalayini concluded that the current Saudi 5-year Development Plan aims to achieve an annual GDP growth rate of 5.2 percent making it one of highest in the world. Through continued investment incentives, private sector, including FDIs, growth is expected to average 6.6 percent annually. Overall, as the case with the Kingdom's development plans over the years, the Government will focus on spending its budget in areas, which will increase the Kingdom's comparative advantages to optimize economic growth and improve the social welfare.